Budget 2023 CPF update and its impact on me

Most of you should have known that Budget 2023 had made quite a few changes to the CPF system.

There are 5 changes made and the 2 main one that affects me and many others the most are.

1) Increase in CPF monthly wage ceiling to $8000 done in steps from September 2023 to January 2026

2) Increase in CPF contribution rate for workers aged above 55 to 70.

You can go to CPF website here to read more about these changes.

So how does these changes affects me.

Since there is no change in the Additional Wage Ceiling (AWC) of $102,000, for people who are getting 5 months or more bonus yearly, there is really not much impact to them on an annual basis except that they will be getting less take home pay monthly but they will get to keep more of their annual Bonus. 

They will also earn slightly more CPF interest since CPF interest is calculated on a monthly basis.

For me, since I am not getting anything close to 5 months of annual bonus, the increase in the monthly wage ceiling will mean that I will be able to contribute more into my CPF for my safety net and retirement. The good part of this is that that my employer will be helping to pay some of that.

Yes, this does also means that my monthly take home pay will be lesser and consequently I will have less disposable income yearly. This is still thankfully manageable for me as the increase is paced out over a few years and I am also fortunate enough to have my side income supplementing the lesser take home pay.

The increase in contribution rate for older workers above 55 to 70 also means more savings for my safety net and retirement and less disposable income when I am older. 

Generally, I welcome such changes since I am fortunate enough to not live from paycheck to paycheck and the reduction in disposable income is bearable. Hopefully this will be the same as I age.

However I do understand that this is not the case for everyone especially in times of rising inflation. For now, with the slue of government support and the increase being gradual, hopefully this will help many people transit to saving more and having less disposable income.

CPF calculator update

I have also updated the CPF calculator, to include these budget 2023 changes.

1) I have updated the CPF contribution rate for older workers. 

2) I have also update the monthly wage ceiling per the table below.

However the implementation of the progressive monthly wage ceiling is not as straight forward and hence I have added a Budget 2023 check box, shown below, to toggle between activating the monthly wage ceiling changes.

Checking that box means that the monthly wage ceiling will progressively change while unchecking that means that the monthly wage ceiling remains $6000 as before.

I may remove this Budget 2023 check box nearing September 2023 after more people uses and test it. Appreciate all of your feedback if you see any issues with that function. 

Thanks for reading and do support me on my referral page. Stay Safe and Happy CPFing!

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